Monthly Archives: December 2011

Not in My Parliament

Not in My Parliament. (NMP).

Today we learn that a record number of nominations have been put up for selection for the nine available places for Nominated members of Parliament. (The NMP scheme)

I’ll tell you where I am straight away. I even find it hard to write the phrase Nominated Member of Parliament. It sounds so ridiculous to my ears. It is an oxymoron unless you are unfortunate enough to still be living under a communist regime where it presumably makes perfect sense.  In fact, functional representatives nominated or selected by different organisations were used in Hong Kong in the first iteration of the post 1997 Assembly because of Beijing’s aversion to direct elections. Since then the Hong Kong Assembly has been steadily moving towards being wholly directly elected overwhelmingly supported by the people despite opposition from the powers in Beijing. Nominated Members of Parliament and increasing the number of nominated members represents a step backwards for Singapore and a step away from democracy.

Isn’t the whole point about members of parliament that they are elected and therefore have a mandate of the people and are accountable to their constituency? They have a responsibility to the citizens at large to elect laws into being, balance the budget and so forth. Parliament is a serious business. Should we really be running a side-show inside?

The way the State directed media is hyping the record number of applicants is fishy to say the least. Ironically this attempt to create a buzz has unwittingly provided the kind of truth that we rarely see in our papers with all  the ‘experts’ agreeing that parliament doesn’t function as it should and can’t hold a decent debate.  The Straits Times kicked off the fun fair with Professor of law Thio Li-ann who said, “it could be because in an increasingly re-politicised environment, there is great interest in channels of participation in public affairs, which is a way of keeping the government to account as well as to promote viewpoint diversity”

The applicants comprise those who have organisations behind them and those who are completely independent.  How can only nine people with partisan and sectarian agendas representing only themselves promote any meaningful diversity?  As they cannot vote and have no mandate to represent the people how can they hold the government to account?  What professor Thio is actually saying here is that Parliament is not to be looked to for promoting diverse viewpoints and needs nine selected bystanders to keep it to account.  It is also ridiculous to suggest that a PAP dominated panel process would result in diversity of selection, as was evidenced with the last batch. She is clearly showing contempt for the democratic process and the role of the Opposition, hardly surprising as she herself is a former NMP.

She then has the temerity to say, “They can get to the merits (of the debate) without being concerned about grandstanding or … ‘playing politics’.” So there you are Mr Prime Minister. All along you and your parliamentary colleagues have been obstructing the path to the merit of the debate with all your grandstanding and ‘playing politics’.  Following the Prof to her logical conclusion we don’t need Parliament or elections, just people like her getting straight down to it. We wouldn’t want to inconvenience her path to running the country with any of that playing and grandstanding.

In fact a system of representatives of groups of people (lawyers, tradesmen, plebs) originated with the Romans and this was carried over to Mussolini’s Italy and Nazi Germany as the bedrock of Fascist government. The idea is that certain groups of people are more important, more worthy, more equal than others and they get a voice.  In modern-day Singapore the NTUC is a good example with several MP’s already in parliament plus their chosen applicants for the NMP positions.

In short the NMP scheme undermines the fundamental principle of ‘one man one vote’.

The second apologist canvassed was Bridget Welsh of SMU who said that she see the incoming NMPs, “drawing on their expertise to enhance the debate and offer alternatives on national issues.” It is good to see that she is in agreement with the Prof and also believes that debate in parliament is ineffectual and flat. The good and great nine contestants who make the final cut are needed to enhance the debate and presumably get a Simon Cowell recording contract as well.

Like Thio she is also completely ignorant of the function of parliament when she talks about ‘drawing on expertise’.   Again a fascist viewpoint suggesting as it does that rule of the people by the people should be replaced with rule of the people by the experts. Parliament is not about being an expert. They summon experts, they hire and consult. They have the civil service. Ms Welsh’ assertion fits in perfectly with the PAP’s view repeated ad nauseam for the last 50 years that the ordinary people aren’t ready, aren’t up to it, or are just too daft to act in their own best interests.

There is a system for sectarian/ partisan/special interest voices and it is lobby groups and civil society activists.  In a truer democracy, diversity and alternate views would be represented by the balance of MP’s from different parties accurately representing the balance of their constituencies and that balance would keep the government to account.  We can keep the government to account in a variety of other ways and one would be to install a parliamentary ombudsman.

We do need to start putting in place the building blocks of democracy if we are ever to develop towards being a fully functioning, fair democracy. The NCMP scheme acts as a kind of apprenticeship and is therefore useful for training up parliamentarians for the alternative Parties. The NMP scheme is more akin to a, ‘bring your son to work day”.  And here’s the rub. I’ve yet to see any NMP actually go on to stand for election and fight to gain a mandate of the people or even aspire to become an MP, so it is completely misleading to bill this as some kind of ‘politicisation.’

I started this article by saying the amount of hype being given to this is suspicious. Whether you object to the scheme as a perversion of democracy or agree with  Dr Tan Cheng Bock who worries that the scheme will harm our diversity and bring in people with hidden agendas http://www.youtube.com/watch?v=7Iji6RqbMAw much of Singapore will jump on the bandwagon and celebrate the number of applicants as a marvellous sign of civil activism.

We will see a lot of commentary on this subject in the coming days. Most of it will echo the language we saw used by the talking heads in today’s ST article. The key words and phrases will be diversity, representation, new society or re-politicised society, strengthening, or enhancing the debate, alternative views, voices, balance, and accountability.  The net effect is an attempt to convince you that the NMP scheme can do everything that the people sought from an Opposition force in parliament.     It is an attempt to neutralise the demand for change, the demand to be heard and the demand for accountability. It is a magician’s sleight of hand in a conjuring trick. “Watch the pretty girl in the fishnet tights whilst I stuff the rabbit into the hat. Hey presto I made the rabbit disappear!”

A repugnant euphemism for rape is no way to safeguard our children

Sex with a child is rape. Whether constitutional or consensual, it is rape.  The media may airbrush it by use of euphemisms such as  ‘affair’ and blur the edges with talk of  ‘seduction’ but it is still rape.  When an affair is being conducted there will no doubt be secret trysts, maybe red roses will be sent and love texts, cute teddy bears or sexy lingerie given as gifts,  who knows?  But where an adult  behaves in this manner with  a child it is not sexy and exciting,  it is predatory and it is called grooming.

Sure some of you may want to argue the boundaries. You may want to discuss variables which make the term ‘rape’ seem alarmist. How about when the  age of consent is 16 and the girl is only a few months short of that and her boyfriend is just 17? Is that still rape?   Now what if they have already planned their wedding? What if they have their parents’ consent?  Sure we can discuss all of these  variables within our communities and our society at large but right here and now we have a case which seems clear-cut as far as reporting goes.

The accused is a 38 yr old teacher  and the victim  was a 14-year-old girl at the time. Compare it to a case in the United States where the accused recently (December 14th) denied all charges.

Sioux Falls man pleads not guilty to rape, alcohol charges in Huron

Full story

HURON — A Huron bar owner accused of raping of a 12-year-old and two 14-year-old girls who was later also charged with serving alcohol to minors while out on bond has pleaded not guilty to all charges.

The press there has no trouble in reporting alleged rape as alleged rape.

It is bad enough when a school teacher  is involved but similar to cases overseas that have tarnished  the reputation of the Catholic church  or Penn State University amongst others, an institution where adults are in a position of trust and authority over  children has failed to act.  What is happening in our schools and what exactly do they think their responsibilities are when a report of inappropriate behavior towards a child on a school trip is dealt with by a warning letter for the teacher concerned?  It is difficult to believe, yet alone comprehend why the  school authorities took no further action and kept quiet all this time.  Again,  why did it take the mother’s discovery for the teacher to get fired? Why was a more thorough investigation not conducted in 2008?  Was protecting the reputation of the MOE more important than the safety of a child?

There are echoes here of the insouciant  attitude of the  MOE towards the  student  Jonathan Wong, already caned for being  a Peeping Tom with an interest in young girls, who was still selected to receive a  teaching scholarship. Thanks to vigilance by educational authorities  in the UK his predilections were  discovered and he was sentenced for  downloading child pornography.

The point is that we need to have a proper screening system  in place.     Too often the attitude in Singapore is, “why worry? Nothing can go wrong ” . Until it does, that is and then we lock down the stable door after the horse has bolted. Or in the case of the poor girl who lost her legs on the MRT platform,  literally shut the gates.  The fact is paedophiles are naturally attracted towards working with children.  There will always be  (hopefully rare)  instances  and we shouldn’t take it as indicative of the teaching profession at large .  But we do need to protect against it.  The Press needs to stop sanitising what is a crime by any definition and the schools concerned ( not  forgetting our private tuition industry ) need to take their duty of care to our children much more seriously. Whilst I have no doubt that the legal system will have no trouble dealing out an appropriate sentence the MOE still needs to get its act together. Maybe time to look at  bringing in a CRB system such as that used in the UK.

Suggested Lines of Inquiry for the SMRT Committee

Recently the Reform Party issued a statement on the SMRT breakdown calling for a Committee of Inquiry.  I am pleased that the PM heeded our call.

However it is not clear whether the Inquiry will be chaired by someone sufficiently independent or whether it will hold its hearings in public. I will therefore reserve my applause.  Meanwhile here are my personal thoughts and proposals on the subject of a COI.

First line of enquiry

The COI should probe the reasons for Ms. Saw’s appointment in the first place.  She may be a retailing guru but she clearly is out of her depth in running a major transport network. Why is no one with a transport engineering background on the board of SMRT?

Second line of enquiry

The COI should look at whether the management of retail space should be bundled with the business of running a transport network. One does not often see airlines involved in running the shopping concessions in airports.  Similarly passenger safety and maintenance of infrastructure is not a high priority for retail concessions so there is not much overlap. Has Ms. Saw been concentrating on boosting the retail side of the business while neglecting the transportation business?

One solution I can think of would be to spin-off the management of the retail space into a separate company and distribute the shares to shareholders. The economics of the remaining transport operating company would be then become clearer and whether the underlying business was viable in the first place.

Third line of enquiry

The crisis has highlighted the need for either, stricter more independent regulation of SMRT and SBS Transit, as monopolistic competitors, or deregulation and the opening of the transport network to greater competition.

The COI must consider whether SMRT has skimped on maintenance, spending far less as a proportion of gross revenue than other major transport operators. Also the breakdown on 15th December highlighted the inadequate training and lack of experience of staff in dealing with a major breakdown.  More alarming is that it indicates their lack of preparedness for a major emergency such as a bomb blast.  Unbelievably emergency back-up systems failed.  Again was this due to cutbacks in spending on safety systems to boost the bottom line?

SMRT’s approach could be characterized as being like the man who jumps off a fifty story skyscraper and is heard to remark as he passes the twentieth floor on his way down, “So far so good!”   I have already highlighted the captive nature of the regulator, the Public Transport Council,  packed as it is with PAP MPs and civil servants or academics at government-funded institutions. I am not the first to do this. As long ago as 1999, JBJ was speaking in Parliament about how the PTC was packed with the “great and the good” and included few representatives of the public transport-using public.

Fourth line of enquiry

Fourthly, and ironically in light of my call for stricter regulation, the crisis has highlighted the need for greater competition. The transport network was thrown into greater disruption because of the lack of alternatives to the MRT network. SMRT organized feeder bus services the next day but there were too few and the drivers were for the most part inadequately trained. Many did not even know what route to follow apart from a hilarious instruction that they were just to follow the train tracks. We need deregulation of the transport network so that other operators, provided they can satisfy the regulator as to deliverability and safety, can enter the market.

While it may be impractical to have two MRT operators on the same line we can certainly have independent bus operators who compete with the train operators and are not part of the same monopoly.  Hopefully they would then be able to respond much faster to the current shortfall in service on the MRT network.  More competition would also be likely to lead to greater investment and a better travel experience for commuters. Both SMRT and SBS, being monopolists, will constrain investment to maximize profits. While our train rolling stock may still be relatively new the same cannot be said of the buses whose age and condition compare unfavourably with those in some other major cities such as London.

The Transport Minister has invoked the spectre of independent operators “cherry-picking” the best routes resulting in unprofitable but socially necessary routes being dropped. I have doubts as to how far this will be the case.  For instance independent operators can use smaller buses or other vehicles to allow capacity addition to be less expensive and responsive to fluctuations in demand.  Ultimately subsidies can be used to ensure socially worthwhile but commercially non-viable services to be provided.

Fifth and sixth lines of enquiry

Next the COI needs to consider to what extent ordinary Singaporeans are paying for bad investment decisions by the government in the 1980s that continue to this day. A related question is how far transport, population and immigration policy are inter-twined. I recall that in the 1980s when the decision to build the MRT was taken it was reported that a team of high-powered urban transport consultants had concluded that an underground MRT network was too costly on economic grounds.  An expanded bus network or some other form of above ground urban transport would better serve Singapore. However LKY, the PM at the time, overruled the recommendations and ordered the go-ahead with the construction of the MRT. I have my doubts about the narrow nature of the cost-benefit analysis undertaken, given that it is usually grounded in a neoclassical framework that starts by assuming full employment in the rest of the economy. In this framework there is an assumed opportunity cost to the investment in the form of crowding out of other investment. There is no macroeconomic benefit to the economy in the form of additional output and the employment of workers who would otherwise be unemployed. When these factors are considered, perhaps the economic argument in favour of buses over the MT was less clear-cut. However it is difficult to argue that there have been any spin-off benefits as we have failed to develop any indigenous mass transit industry despite the huge investments made.

It was around this time though that the government took the decision to start opening the floodgates to foreign labour though there was really only a bonfire of immigration controls after 2001. The authors of the study were undoubtedly unaware of the government’s plans to drastically increase the population. If they were their conclusions may have been different.

Perhaps one of the reasons for the vast increase in population is an attempt on the government’s part to make its investments in infrastructure economically viable. When the current PM Lee, boasts about the $60 billion investment the government is making in additional lines perhaps he is assuming a population increase to seven million or more in order to justify the investment. One could say that the tail of infrastructure investment is wagging the population dog. As usual, the people are on the receiving end of asymmetric information as the government refuses to come clean on its plans.

Even with the deliberate overloading of our transport network through a policy of uncontrolled immigration, the fundamental question remains.  Is the MRT network commercially viable at all even with the government already taking on all the costs of the network infrastructure?  I suspect that the real reason that the government does not want any competition in public transport is that bus services could undercut the MRT. The result would be that it would be forced to cut its fares resulting in the government having to subsidize the MRT operators or take them back into public ownership.

An example of this phenomenon is the Channel Tunnel between the UK and France where the tunnel operators went bust because they had to compete with the ferry companies which benefited from sunk costs in the form of fully depreciated boats. Another would be the experience of US airlines after 1973. Complete deregulation led to big falls in air fares. Existing airlines were unable to earn a satisfactory return but new entrants to the industry kept prices low and the consumer benefited. In economic terms greater competition led to consumers capturing more of the area under the demand curve (what is known by economists as consumer surplus).  However the gains to consumers in the form of lower prices and more capacity outweighed the losses to producers.  It is likely that this would happen here if public transport was opened up to competition.

Conclusion

This is an opportunity to set bold terms of reference for the COI and to radically reshape public transport policy in a way that will benefit consumers. Certainly this is what I would want to see if I were Transport Minister.  However I somehow doubt that the interests of consumers will come first.

Immigration is the Elephant in the Room

Raging Elephant

Elephant in the Room

Yesterday the ST gave us a centre-page spread by two vice-presidents of the Economics Society discussing the rise in inequality in Singapore. The fact that one of them is the Chief Economist at GIC and the other is Director of Planning at Resorts World Sentosa might be a clue that we are not going to hear much that is radical from them. You might want to question what insight they will be able to give you into why your ricebowl doesn’t look like your neighbour’s rice bowl. After all someone from GIC is effectively a civil servant, while Resorts World Sentosa presumably wouldn’t like attention called to the fact that the euphemistically named ‘Integrated’ Resorts probably contribute in a small way to rising inequality.

The writers state that the government’s attempt to minimise the cost of social welfare by focusing only on those in the direst need has exacerbated inequality and led to a more divisive society. I use the word “focusing” somewhat  ironically as many Singaporeans would say that the aim of government welfare policy is to ensure the eligibility criteria are so tough that everyone is excluded.  In fact this is the crux of the PAP theory of your ricebowl  that I like to examine in these pages. However, while the authors argue that an inclusive society is better from everyone’s viewpoint and that this is best achieved by universal social programmes, they make the mistake of assuming that the government is actually interested in inclusivity and fostering social cohesion. There are many who hold by outmoded theories of Darwinian competition (though strangely this belief vanishes when it comes to politics or areas of the economy that the government dominates). MM Lee’s famous words, about Singaporeans needing a spur in their side from new immigrants if they are not to become lazy and complacent, spring to mind.

This brings me on to the most surprising – or perhaps not so surprising if you consider the government connections – aspect of their article.  They discuss the near stagnation in real median incomes of those in full time employment and absolute stagnation for those in the bottom 20th percentile, even on the government’s own highly selective and possibly biased figures.  The use of the base year of 2001 probably flatters what little growth there has been, as incomes declined from a high in 1998 and reached a low in 2001 after the Asian crisis and the end of the dot-com boom. The government’s figures also do not allow for changes in hours worked, which probably rose over this period. For a fuller discussion, please see my article, The Stagnant Society (http://sonofadud.com/2011/10/13/singapore-the-stagnant-society/) for a longer discussion.

However they fail to mention the elephant in the room, which is immigration policy or the lack thereof. Undoubtedly the government’s determination to allow our wages to be determined by those in the poorest economies in Asia has played a major part in depressing real wages, particularly for the lower-skilled workers. Not only was there very little restriction on foreign labour, and no restriction at all for those earning more than $2,500 a month, but there appears to have been lax enforcement of what rules there were and ample loopholes. This has been demonstrated by a recent case where an employer was jailed for putting phantom Singaporean workers on his payroll to allow him to bring in more foreign Work Permit holders.

In his book 23 Things They Don’t Tell You about Capitalism (http://www.guardian.co.uk/books/2010/aug/29/ha-joon-chang-23-things), the Cambridge development economist, Ha-Joon Chang, uses a comparison between the wages of a bus driver in Sweden and one in India. The Swedish bus driver earns around fifty times as much as the Indian bus driver yet it would be hard to say that he was fifty times as productive or skilful. In fact the Indian bus driver probably has the more stressful job or requires more skill, given the state of Indian roads and the density of traffic. The differential between the Swedish bus driver’s wage and the Indian’s is almost wholly attributable to immigration controls. Of course Swedish wages are high to start with because of their much higher productivity in the traded goods sector which is subject to competition. Employers in the non-tradeables sector then have to pay higher wages to compete for scarce labour. Without being able to bring in foreign labour they have little choice.

What we have in Singapore is  a situation where the wages of those who can be replaced by cheap foreign labour have been held back or in many cases cut.  Even those with higher-level skills have undoubtedly been held back by competition from third-world graduates from India, China and the Philippines, even Eastern Europe.  Worryingly there are clear indications that advances in software and machine intelligence are starting to make redundant even highly-paid white-collar jobs in areas such as law and financial services that were hitherto relatively protected from foreign competition. But this government’s open door policy to foreign labour has been the main cause of rising inequality in Singapore.

Whether we have a minimum wage, or a cap on foreign labour (which amounts to the same thing), this is the Elephant in Room whose emissions are causing the inequality. Unfortunately, we risk the Elephant turning into a Raging Bull if the xenophobic ranting in cyberspace is anything to go by. What we need now, and urgently, is some serious and open and reasoned debate on the future of Singapore.

A Circular Argument by Massagos in Favour of Slave Labour

Minister of State Zulkifli Massago’s was reported today(http://www.todayonline.com/Singapore/EDC111214-0000085/National-Servicemen-may-be-deployed-to-safeguard-rail-network–Masagos) as saying that , with the expansion of the MRT and the opening of 12 new Circle Line stations the Government was considering deploying National Servicemen on the front line to keep the nation’s public transport system safe.

This strikes me as totally inappropriate even though the use of National Servicemen as cheap labour has gone on for some time. When they are deployed in this kind of security role it frees our government and the transport companies from having to recruit more volunteer security personnel who would have to be paid a market wage for their services. Our NS men are paid a fraction of what they would earn in a free labour market. This is admittedly somewhat better now than what I got when I was in the army. I still have fond memories of withdrawing $60 salary for one month and being looked at with disgust by the female POSB clerk (no ATM machines in those distant 1970s days!).

In economic terms the deployment of NS men in public security roles amounts to a labour subsidy. There is a transfer of value from the NS men to the owners and operators of the transport network.  Another indirect beneficiary, insofar as the provision of subsidised security services allows them to cut back on private security services, is the owner of the land above and next to the MRT stations and bus interchanges which in many cases will be the Singapore Land Authority or the government-linked property companies such as CapitaLand and CapitaMall. If the transport network was publicly owned then it could potentially be argued that this subsidy was returned to Singaporeans in the form of lower transport fares and/or taxes. However the transport companies and the property companies, with the exception of the SLA, are publicly listed. They may be controlled by the state directly, in the case of SMRT whose majority shareholder is Temasek. Or the government may exercise a shadowy control through the preponderance of ex-civil servants, Temasek directors and MPs on the board and the largest shareholder being an arm of NTUC. This is the case with ComfortDelgro.   But they also have minority private shareholders. In a competitive market fares would fall by the full amount of the labour subsidy. However the public transport market is one of monopolistic competition. Part of the benefits of the labour subsidy, probably the major part, will go to the shareholders of the companies in the form of higher after-tax profits. So private shareholders benefit.  It could be viewed as a form of regressive taxation since it transfers part of the value of the NS men’s output to well-off shareholders. Many of these shareholders are foreign and have not had to do NS.  In addition in so far as the senior executives at SMRT and ComfortDelgro are able to pay themselves higher salaries as a result of higher profits due to the labour subsidy then this is another form of transfer from the less well-off to the better-off which would not happen in a free market.

Even in the case where the increased profits go to the government’s coffers, they are more likely to go into the reserves rather than being redistributed to Singaporeans in the form of higher spending or lower taxes. And as I have repeatedly pointed out, most recently in the article You’ll Be Dead before You Can Spend It (http://sonofadud.com/2011/11/29/youll-be-dead-before-you-can-spend-it-singaporeans-enter-the-20th-year-of-unnecessary-self-imposed-austerity/ ), we are unlikely to get to spend those reserves. They are likely to continue to be used for empire-building but ultimately lousy investments. Alternatively some mechanism will be found to redistribute them to the debtor countries. One extreme is outright default but a more probable scenario is some form of below-market rate of return recycling of our assets. This will take place through multilateral institutions but be orchestrated by the principal debtor countries who rightly feel aggrieved that their consumption and overvalued exchange rates have swelled the current account surpluses of countries like Singapore, Japan, China and Germany. I challenge the government to prove that it has exhausted all investments in Singapore that yield a higher rate of return, even using purely financial criteria.

Even if taxes are lower as a result of the forced labour of NS men the benefits also go to foreign workers and residents as well as women, who have not done NS. They also benefit the wealthier sections of the population given this government’s proclivity for cutting top tax rates while increasing indirect taxes such as GST. I am all in favour of low taxes but not where these are financed disproportionately by a subsidy from the less well-off.

This redistribution of the benefits from the providers of the subsidy is equally true if by some miracle the companies behave as though the market is competitive and return the subsidy to consumers in the form of lower fares. Again foreign workers, tourists, PRs , the lucky foreign students whom our government woos with scholarships and then exempts from NS, and Singaporean women benefit while not having to bear the cost of the subsidy.

One of the causes of the French revolution was resentment at the forced labour tax (the corvée) levied on the peasantry by the state. More recently countries like China were condemned by the West for using convict labour in a range of manufacturing industries. Not surprisingly this made them super-competitive in those areas.  Both the Soviet and Nazi regimes benefited from the huge use of slave labour. When we deploy our NS men in roles in providing services to commercial companies we are doing the same albeit on a smaller scale. Even when our men are used purely for national defence, the savings from not having to pay a regular army leak to foreigners, new immigrants, foreign investors and women, all of whom do not have to bear the economic cost. That is why I have argued that NS needs to be reduced to one year immediately with a view to eventually phasing it out all together. In the meantime, or if this is viewed as undesirable on non-economic grounds, then those doing NS should be paid the full market value of their labour, either directly or indirectly in the form of lower taxes or free or subsidised medical care or further education. In the name of sexual equality women should have to do NS. And foreign workers, particularly those who enter on scholarships but are invited to stay on by our generous government, should do NS or pay higher taxes.

I remember when NS was first introduced, the late Dr. Goh Keng Swee, said that it would be seen as fair because whether you were the son of a millionaire or a hawker, you would not be able to escape.  We have clearly moved a long way from those ideals! It is time to see that the burden is lifted or that those who benefit pay the full market values of the subsidy.

Dear Santa, I don’t like the cadre and secret cabal I got last year. Next year I’d like some openness, competition and democracy instead.

Recently the PAP held their first Party convention post election allowing us to scrutinise the cadre system and the iron grip on power that it provides for.  AlexAuwrote about it in his blog (http://yawningbread.wordpress.com/2011/12/03/four-barriers-to-remaking-the-pap/) where he highlighted his opinion that the cadre system is one of four main reasons why the PAP would fail to learn any lessons from their setback in GE 2011. The rest of his reasons would be worthy of discussion in a separate article in their own right.  However as we look back at 2011 I will concern myself with a closer look at the cadre system and how it affects your ricebowl.

It is of course not only the PAP who employs the cadre system. For the benefit of those who may be unfamiliar with the term, a cadre system is one in which the leadership of the Party selects certain members to be cadres. The cadres are then the only members who have voting rights   and they elect the leadership. It is of course a completely closed system in which the leadership ensures its position by only selecting as cadres people who will be loyal to them. The cadre vote the leaders who select the cadre who vote the leaders who select ………………..and so on.

In her 1971 political science thesis, “Singapore’s People’s Action Party: Its History, Organisation and Leadership (Oxford University Press)”, Ms Pang Cheng Lian, who sits on the board of Temasek Cares, describes elections to the CEC by the cadres as a “closed system”, in which “the cardinals appoint the pope and the pope appoints the cardinals”.  Most of us Singaporeans know this system is employed by the men in white.  Sadly, as far as I am aware, every other political party in Singapore employs a variant of the cadre system. This includes the Workers Party, the SDP, the NSP and the SPP.  I have no information about the other new parties, the Justice Party the USD (does anyone remember them? ) and the new parties still to come  in 2012 but I believe it is safe to assume they all employ or will employ the same system.

Just as Alex believes the cadre system may explain why the PAP is incapable of learning new lessons so I believe that adherence to the cadre system may be partly responsible for the agonisingly slow progress of the Opposition parties and the dearth of new ideas or renewal.  It is certainly the culprit behind the endemic Party hopping which discredits all Opposition equally and has nothing to do with renewal of ideas. Party hopping is the same old faces, with the same old ideas but with new titles.   It would take a visionary to develop a party with a radically different structure. Or maybe a democracy veteran with no time left to lose who, looking back on his life’s work, realised that closed organisations can’t give birth to Open Societies. Yes, The Reform Party is the only political party in Singapore which is a democracy since it alone does not have a cadre system to protect the leadership and all members have voting rights.

The cadre system has its origins in the Marxist concept of the “dictatorship of the proletariat” and the “vanguard”. This meant that only a small elite group of individuals were fit to lead the Communist Party and the nation. The masses were not ready for democracy and it was better that they be led by those who knew best. The Communist ideal was one of eventual full democracy once the masses had been educated enough. Leninargued (Wikipedia, http://en.wikipedia.org/wiki/Vanguardism) the ideal vanguard party would be one where membership was completely open and its workings transparent, the “entire political arena is as open to the public view as is a theatre stage to the audience” (from What is to be Done?).  He seems to be acknowledging the benefits of competition though cannot speak its name when he goes on to say that a party that supposedly implemented democracy to such an extent that “the general control (in the literal sense of the term) exercised over every act of a party man in the political field brings into existence an automatically operating mechanism which produces what in biology is called the “survival of the fittest”.” This party would be completely open to the public eye as it conducted its business which would mainly consist of educating the proletariat to remove the false consciousness that had been instilled in them.

The cadre system went on to be adopted by both the Kuomintang and the Chinese Communist Party and by many other Maoist revolutionary parties throughout the world.  Lenin originally intended it to deal with the problems of controlling and maintaining the secrecy of the Bolshevik party which was seeking to overthrow the Czarist regime in Russia, in the face of infiltration by the Okhrana, the Czar’s secret police.  Ironically the goal of preventing infiltration, this time by Communist agents, is the oft-cited justification given by the PAP leadership as to why the cadre system was introduced. If so it does not justify its retention today when there is no longer a Communist threat. Even if there were the ideal way of combating it would surely be through more democracy not less.

Of course the Communist roots of the PAP are not a secret.  This is why the arbitrary arrest and detention of certain individuals on the grounds that they were Marxists and that they represented a secretive organisation is particularly ironic.

The fact that the PAP continue to maintain a cadre system shows how out-of-step they are with modern democratic parties and how little understanding they have of the benefits of competition and transparency and accountability. While they maintain a closed system which ensures that only people, who hold the leadership’s views, whether out of principle or self-interest, get to vote, it is difficult to see how any renewal can take place. Perhaps it is too much to expect the ordinary people of Singapore to understand the need for multi-million dollar salaries for ministers. They are afflicted with the false consciousness of a belief in democratic values and the equality of individuals. You need elite (the cadres) who are sufficiently intelligent not to fall prey to false consciousness to understand why servant leaders need millions of dollars as remuneration.  Hopefully the review board will be able to explain it to us shortly.

However the other parties inSingaporeclearly feel the same way as the PAP that democracy is a dangerous idea and power should not be entrusted to the ordinary members.  Or they merely aspire to be the PAP and adhere slavishly to their ideas and methods-PAP LITE, if you will.  Whatever the motivation, all of them maintain some sort of cadre system. The argument often given for the necessity of this is that it leads to “stability”. This is just another facet of the argument that democracy leads to gridlock and that the people are too short-sighted or stupid to exercise power responsibly. Even if a so-called extreme faction managed to be elected to the leadership, like the AWARE situation, ultimately democracy ensures competition. If the new leadership fails to reflect the will of its members or is unsuccessful at winning electoral office then it can be replaced.

It is genuinely worrying that so much of the Opposition shares the same mindset as the PAP. This begs the question as to whether their leadership are genuinely interested in change or representation or whether it is merely power that they seek.

To recap on what I said earlier, the only party that does not have a cadre system is the Reform Party.  The RP is thus the only genuinely democratic party. Instead of a closed system, the RP CEC is elected by the Party Conference which is made up of delegates.  Everyone, provided they fulfil basic criterion, gets a vote.  As a result the Party is the purest expression of the will of its members. The Party Conference promotes a free market in ideas as any member can put forward a motion. As it forces anyone running for office to be responsive to the views of the members, it represents the implementation at the Party level of the principles we are fighting for at the national level.  We refer to this as Conference being Sovereign. It is clear that when JBJ set up the RP he wanted to have nothing to do with secretive cabals and backroom deals and start a party that would exemplify the virtues of democracy. He learnt from bitter experience, when he was ousted as SG of the WP, how dangerous an unrepresentative clique is.  In a way a genuinely democratic party was his legacy to the nation and serves as a model of what we need to see at the national level.

Many are scared away from joining the RP because of the lack of a cadre system which they feel makes it inherently unstable.  Certainly its first three years have not been an easy ride.  But if democracy itself is something we seek and value then a truly democratic Party is a necessity.  As the RP is not a good long term bet for ironclad  power, it is less attractive as an option to those who are power hungry or egotists.  Why go to all that trouble to infiltrate a party to make it less radical, less viable as an agent of change, when you may be voted out in 2 years time and the Party may simply revert to its former state?  This is what we saw happen with Aware.  A group of women cleverly saw that getting like minded members in the organisation in sufficient numbers was key to changing its identity.  But ultimately Aware was strong enough and its original ideology and had been in existence long enough to shake off that challenge.

No doubt many initially joined RP in error not clearly realising the ramifications of the democratic nature of the constitution.   What a shock it must have been to them to realise that Conference is Sovereign and yes, they would actually need to get a majority vote from ordinary members to change the constitution and bring in a cadre system.  How much easier it was to simply do a deal for power and leadership elsewhere  in exchange for sabotage.  And how much more effective to do it in collaboration with the State media, ever hungry as they are for dirt.

But here is the surprising thing. RP as an organisation , as Aware did before them, similarly survived with its democratic nature intact and went on to field 11 candidates in GE 2011.  So maybe democracy is not the greatest weakness of a   political party but its greatest strength in the long term.  Certainly many commentators like Alex are now seeing the cadre system as responsible for hampering progress within the PAP and its greatest obstacle going forward.

What next in 2012?  Well the PAP cadres have concluded their convention and business goes on as usual within their closed circles.  There has been a lot of talk of Opposition parties joining forces in a grand coalition as well as of new parties being set up. However the important question for voters should be whether any of the parties are genuinely democratic. I would not wish the RP to merge with another party for example, unless that party were also to adopt a democratic constitution and abandon the cadre system.   My fervent wish for 2012 is that any new party set up will be Democratic and that through openness and with competition fostering progress we will go forwards as a Nation and not backwards. We need to change the old Singapore/PAP influenced Model so that we can have a better future.  As always I am daring to imagine a new rice bowl for an advanced Asian nation.

Comfort and City Cab. Two more pies with fingers in them.

The nature of our small metropolis, the costs of private vehicle ownership and other factors such as convenience for elderly and physically challenged users, means that Taxis must be viewed as part of our public transport network.  It is therefore not surprising that most of us have been unhappy at the recent fare hikes and increases in surcharges announced by the largest taxi operator, Comfort and CityCab, which is owned by ComfortDelGro Corporation.    The National Taxi Association (NTA)’s call for the other taxi companies to swiftly follow suit has furthermore appeared, to many, to smack of price-fixing.  There have even been calls for the Competition Commission of Singapore to take action for anti-competitive behaviour.

However this is naive given the industry’s structure. Furthermore it plays into the government’s deliberate lack of transparency when it comes to admitting to the degree of ownership and control it exercises over the Singapore economy.  The problem is the dominance and nature of the government linked entities. This is the elephant in the room and would be activists should complain about this rather than cry “price fixing”,  before they pen letters to the Competition Commission.

Firstly, Comfort and CityCab between them have over 60% of the market for taxis. SMRT, a Temasek-controlled entity, has another 10-15% of the market. While ComfortDelgro is publicly listed with no single majority shareholder, the largest shareholder is the Singapore Labour Foundation, which is the investment arm of NTUC.  Its board and management are a splendid example of the Japanese practice of “amakudai” or “descent from heaven”.  Most of the board are ex-civil servants, former government scholars, or present or ex-MPs who have graduated here after careers with Temasek or one of its stable of companies.  To quote Wikipedia, “The practice is increasingly viewed as corrupt and a drag on unfastening the ties between private sector and state which prevent economic and political reforms.”

With that combined level of market share the taxi market can be viewed as highly concentrated. Economists would call this monopolistic competition. SMRT and ComfortDelGro’s control of the taxi market is reinforced by and reinforces their monopoly of all other forms of public transport in Singapore. I have pointed this out numerous times, most recently on 23rd November in “Another Round of Monopoly Anyone?” (http://sonofadud.com/2011/11/23/another-round-of-monopoly-anyone/). While there may be a high elasticity of substitution between different forms of public transport the elasticity between public transport as a whole and other forms of transport is considerably less.  Commuters would face considerable “sunk costs” in switching to private transport and this is not available to any but the highest income groups. The monopolists are able to maximise profits across public transport as a whole and given that demand will be fairly inelastic have a fair ability to raise prices. The only constraint is the Public Transport Council which in the same way as the NTA is filled with government and company-friendly appointees and thus unlikely to be as tough in defence of consumers’ interests as it should be.

In this environment, it would not make any sense for the marginal operators, i.e. Transcab, Premier, SMART and the remaining Yellow Top taxis, to undercut them. If they do so, they would not gain much extra business and risk the dominant operators reducing their prices to drive them out of business. By setting their prices at the same level as the market leader, the industry as a whole maximises revenue and the revenue is shared out according to market share.  In economic terms SMRT and Comfort and CityCab are price-makers and the others are price-takers. Without doing anything to break up the dominance of the two government-linked entities, it becomes irrelevant whether there is any overt price-fixing agreement or other evidence of collusion. The prices of taxi services will still end up at or close to the level a profit-maximising monopolist would set.

The problem therefore is the dominance of the two government linked entities. The monopoly rents are unlikely to accrue to the drivers who have to deal with a monopsonistic market (a limited number of buyers) for their services. Over time the taxi operators are likely to raise their rents and ensure that much of the revenues from higher fares are clawed back from the drivers who constitute an atomistic group without much bargaining power and a fairly elastic supply of new drivers. The industry body which is supposed to represent their interests, the NTA, cannot be said to be independent of the government or its companies since many are MPs or ex-MPs.

While consumers may complain about the fare increases, the fact remains that Singapore taxis are cheaper than in many other cities in the developed world, where often artificial barriers to entry are created. This will be less true after the latest fare hikes. In addition the system of surcharges, which are increased with the latest measures, is badly designed and only succeeds in creating shortages of cabs before and after the surcharge period and long queues of empty taxis during the peak periods.

I have already called for a far greater degree of competition in other areas of public transport, particularly in the provision of bus services. Where more competition is not possible, there should be stronger and more effective regulation, particularly of non-price areas such as frequency of service. With regard to taxis, the decision to phase out independent operators should be reversed provided they meet minimum safety and quality standards. We need to bring back Yellow Taxis and give them freedom to set their own fares and negotiate with their customers. This might eliminate the current demand-supply mismatch at different periods of the day.

Apart from the obvious high rates of return on investment from leasing taxis, perhaps the government was influenced by its desire to see that Singaporeans keep their noses to the grindstone (MM Lee’s “spur in their sides” philosophy or, “You have been given a precious porcelain rice bowl don’t break it!”). The government has always striven to ensure it captures most sources of economic rent.

The underlying monopoly is undoubtedly a more formidable challenge which can only be addressed at the ballot box but it needs to be addressed.  Any call for a CCS investigation of possible “price-fixing” while the underlying monopoly goes unchallenged, is a charade and merely a self promotion exercise for those involved.

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